Developers and investors have written to housing minister Brandon Lewis proposing a three-point action plan that could see more than 250,000 extra homes built for rent.
The Better Renting Campaign’s letter, signed by 11 companies, says that Build to Rent – where corporates build clusters of homes that are then let rather than sold – could help the government deliver its pledge to build a million homes by 2020.
The letter claims that traditional house builders are at full capacity and that support for corporate landlords could bring £50 billion of new money into the sector.
The letter asks ministers to set aside an agreed proportion of public land for Build to Rent development. Councils and public landowners could generate long term rental income from buildings or land, allowing them to fund under-pressure public services.
The group also calls on chancellor George Osborne not to apply an additional three per cent stamp duty charge to professional Build to Rent developments. Last December, Osborne promised to only apply this to buy to let investors only, but subsequently reversed this pledge.
The group claims the move will dampen investor appetite to build more homes and could deter further investment which could build more than 250,000 new homes.
Finally, the campaign’s letter calls for recognition of Discount Market Rent homes as an accepted form of affordable housing. This would allow developers to create subsidised rental homes as part of their development commitments, following the use of the policy in the London boroughs of Ealing, Greenwich and Brent.
Signatories to the letter include Grainger Plc, Essential Living, LaSalle Investment Management, HUB, Fizzy Living, Real Star, Hermes Investment Management as well as Mishcon de Reya, a leading city law firm.
Andrew Stanford, UK residential fund manager at La Salle Investment, says there is now a "once in a generation opportunity to harness a large portion of potential investment and direct it at housing built solely for rent."
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Care is needed here, because when all's said and done this is a demand from vested interests who want legislation and funding for their own reasons.
Of particular concern will be location. In my neck of the woods in the north, both property prices and rents have been declining since 2008, and this from a previous level which was already very low by UK standards, with two-bed Victorian flats in nice condition going for just £70K and the same property for let at around £100 p.w..: yet in real terms prices are down about 25% since then and rentals are also down a good 20% (with more and longer voids, too, as prospective tenants have a great deal of choice). In other words, there is not a shred evidence of insufficient supply in this market. In fact quite the contrary: there is serious over-supply driving prices steadily down.
The last thing we need therefore is for public authorities and powerful corporate interests working hand-in-glove to start using taxpayers' money to further hammer the suppliers in a struggling private rented sector where market forces already strongly favour the tenant.
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